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Fast Facts: Infrastructure Investment and Jobs Act


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Fast Facts: Infrastructure Investment and Jobs Act

By Kelly Gagliuso, Rachel Becker McEntee, Conor Shankman, and Amanda Methot

In Brief

On November 15, 2021, President Biden signed The Infrastructure Investment and Jobs Act into law. The new law—which represents the largest investment in infrastructure in our nation’s history—will significantly affect both the public and private sectors. State, local, and tribal governments should begin planning now for how they intend to access and use allocated funds, along with how they plan to report required project information to the federal government. Companies in the transportation, construction, energy, and telecommunications industries will see a major influx in funding to support large-scale projects and should begin working now to understand how to leverage these federal funds, as well as address existing challenges related to labor shortage and supply chain issues.

Bernstein Shur is actively monitoring the implementation of the new law and is prepared to help you understand and benefit from it in the months ahead.

The Detail: Transportation

Transportation infrastructure is a major component of the law, with increased funding and expanded eligibility parameters for existing programs, as well as new funds. A majority of the funding—approximately $110 billion—is set aside for roads and bridges. In addition, there is $39 billion set aside for transit and $66 billion for rail.

New Funding

The law provides for 11 new competitive grants for local governments. Local governments will be able to apply directly to the USDOT for funding to improves their highways, roads, and bridges, improve rail and public transit, as well as increase safety for pedestrians. This funding will be especially useful to communities that often have to wait for states to develop a program and allocate funds to local units of government.

Major Changes to Existing Programs

The law increases funding to the Surface Transportation Block Grant. This program provides a federal allocation for state use as well as allocations to local governments, and has newly expanded eligibility to include electric vehicle infrastructure, protection from cyber threats, projects to increase tourism, wildlife collision mitigation, and resiliency improvements.

In addition, Amtrak will now be required to consult with local governments before creating new routes. This will allow for more input from the community and ensure that Amtrak is serving both the relevant region as well as its local hubs.

The Detail: Climate and Energy

Transmission

A key provision of the law enables the Federal Energy Regulatory Commission (FERC) to directly permit construction of new transmission corridors in designated areas, called National Interest Electric Transmission Corridors. FERC is empowered to overturn state agency decisions that prevent construction of transmission projects in these corridors. This provision has the potential to increase the number of transmission projects that are actually constructed, despite state and local opposition.The law also provides $50 million for a program for the Secretary of Energy to encourage the construction of new transmission lines. These funds can be spent by providing loans for construction, entering into capacity contracts for up to 50% of the capacity of a proposed project, as well as public private partnerships for projects. This funding will reduce financial risk when developing large scale transmission projects. This funding mechanism, combined with FERC’s expanded permitting authority, has the potential increase the number of projects that are constructed and interconnected with the grid, reducing congestion and potentially bringing renewable energy to areas traditionally served by fossil fuels or retiring nuclear generation.

Energy Efficiency
 

There is approximately $3.5 billion authorized for upgrades to promote energy efficiency, which is allocated to two major areas. The first area includes upgrades to the infrastructure of public transportation systems. The second area includes a competitive grant program available for public schools. These grants will allow for school districts to upgrade facilities to decrease energy costs as well as installing alternative fueling infrastructure on school grounds and for school buses.


Clean Energy Technology

There is approximately $7 billion authorized to establish and shore up supply chains for clean energy technologies, including batteries, mineral mining, and recycling or second life programs. These programs are largely grant programs for demonstration projects, retrofitting existing processing and manufacturing facilities, establishing new facilities, and funding research into new science and technology. There is also approximately $28 billion authorized to invest in carbon dioxide infrastructure, and additional opportunities exist for clean hydrogen development, hydropower producers and pumped hydropower storage.


Environmental Protection

The law allocates $6 billion ($1 billion in loans and $5 billion in direct grants) to be administered by the Environmental Protection Agency, to address emerging contaminants, including per-and polyfluoroalkyl substances (PFAS). The direct grants are specifically available in disadvantaged communities.The law also provides $1.2 billion in competitive grants for brownfields remediation projects, providing opportunities for local governments and quasi-governmental entities to reclaim contaminated sites for productive economic development.The law also codifies the One Federal Decision framework for National Environmental Policy Act (NEPA) evaluation originally adopted by the Trump administration. This framework directs federal agencies to cooperate on a single, coordinated process to evaluate projects for NEPA compliance, resulting in a single environmental impact statement and record of decision. The framework also requires the NEPA evaluation to be complete within two years after the Notice of Intent to the issuance of the record of decision, with all federal permits issued within 90 days after the record of decision is issued. This streamlined process has the potential to further increase the pace of new construction and reduce permitting risk traditionally associated with NEPA.

 

The Detail: Broadband

There is approximately $65 billion set aside for broadband infrastructure. A majority of this funding will be allocated to states to expand broadband access. There is $1 billion set aside over the next five years for “middle mile” projects. This set aside allows local governments to apply directly to the National Telecommunications and Information Administration for grants to construct, improve, or acquire middle mile infrastructure. Projects that service underserved areas will be prioritized. For example, this funding has the potential to provide broadband to thousands of people in Maine and New Hampshire who currently lack access to high-speed internet.


Other Important Elements of the Law

Reduction in Red Tape

Buried deep in the law are provisions to streamline the federal environmental review and permitting processes. These reforms could eliminate years of delay and significantly reduce the costs inherent in developing federally funded infrastructure. The law also encourages the use of public-private partnerships (P3s) to leverage available federal funds.


Labor Preferences

In an Executive Order issued on November 15, 2021, President Biden noted that high labor standards, including “prevailing wages and a free and fair chance to join a union,” are among the law’s highest priorities. These statements may signal a preference for projects utilizing organized labor or Project Labor Agreements.


Slow Roll Out

The law is not a typical stimulus bill which funds only “shovel-ready” projects already in the pipeline. Instead, it represents a longer-term, patient approach to encourage comprehensive investment in modernized infrastructure with long-term generational benefits. As a result, the majority of the spending is expected to take months or years to implement.

 

Bottom Line

The law provides once-in-a-generation opportunity for state, local and tribal governments to make significant investments in “traditional” infrastructure projects such as roads and bridges, while also investing projects that will provide new access to renewable energy, beneficial electrification, and broadband. For the private sector, renewable energy and construction sectors, along with their associated industries, will see a massive influx of capital and projects over the next five years. These industries are already working at unprecedented levels, and the size and scope of these potential projects will require additional staff in an already tight labor market, as well as likely escalate pricing for American iron and steel, concrete, and asphalt.

 

To learn more, visit Bernstein Shur’s Construction, Energy, and Municipal & Governmental Services Practice Group webpages or contact us with questions here.